SENS-AI
SLM Trading Statement Bullish

SANLAM LIMITED - Operational update and trading statement for the year ended 31 December 2025

Sanlam Limited
Full analysis

What this filing means

Sanlam's 2025 update shows record operational volumes and strong 15-25% normalised earnings growth, despite a technical double-digit decline in reported headline earnings due to prior-year disposal gains.

Sanlam is selling more insurance and managing more money than ever before, leading to a big jump in their 'normalised' profit. However, their official 'headline' profit looks lower because last year they had a one-time boost from selling off parts of the business.

Bull case

  • Normalised net result from financial services (NRFFS), the dividend-driving metric, is expected to grow by a robust 15% to 25%.
  • The group achieved record annual new business volumes with 22% normalised growth and more than doubled net client cash flows.
  • Discretionary capital increased by R4 billion, enhancing balance-sheet flexibility for future M&A and growth.
  • Normalised life and health earnings show strong underlying growth of 20% to 30% when excluding one-off 2024 items.

Bear case

  • Reported HEPS is expected to contract by 15% to 25%, while EPS is down 25% to 35% due to high 2024 disposal bases.
  • Value of New Business (VNB) declined 11%, pressured by a product mix shift toward lower-margin market-linked annuities.
  • The transition to IFRS 17 accounting resulted in the crystallisation of negative investment variances and ALM mismatches.
  • Higher finance costs from the Assupol acquisition and increased project spending are weighing on net operational earnings.
View original SENS announcement

AI-generated summary by SENS-AI, based on the original JSE SENS filing.

SENS-AI conclusion

Sanlam has delivered a complex but fundamentally sound operational update where record new business volumes and 15-25% normalised NRFFS growth (the dividend proxy) outweigh the optically poor 15-25% decline in reported HEPS. This decline is largely a continuation event following the high 2024 disposal base and technical IFRS 17 transition variances, rather than a sign of operational rot. Signal-to-Price Note: The price is down 1.65% (extending a 5-day decline of 6.76%) as the market digests the reporting complexity and the 11% VNB contraction. Investor Takeaway: With the stock trading below its 50-day moving average but supported by a R4bn capital buffer and strong underlying momentum, the current 10.1x forward P/E offers a reasonable entry for a high-quality diversifier.

The underlying dividend-generating capacity remains intact. View the current technical price weakness as a long-term accumulation opportunity.

Decision framework

Current stance: Lean Bull

Key drivers

  • Normalised net result from financial services (NRFFS), the dividend-driving metric, is expected to grow by a robust 15% to 25%.
  • The group achieved record annual new business volumes with 22% normalised growth and more than doubled net client cash flows.
  • Discretionary capital increased by R4 billion, enhancing balance-sheet flexibility for future M&A and growth.

Key risks

  • Reported HEPS is expected to contract by 15% to 25%, while EPS is down 25% to 35% due to high 2024 disposal bases.
  • Value of New Business (VNB) declined 11%, pressured by a product mix shift toward lower-margin market-linked annuities.
  • The transition to IFRS 17 accounting resulted in the crystallisation of negative investment variances and ALM mismatches.

What would change the view

  • Forward guidance is cut or withdrawn in the next update.
  • Cash-flow conversion deteriorates relative to reported earnings.
  • Positive thesis fails to hold through the next reporting window.

Evidence from the filing

  • Normalised net result from financial services (NRFFS), the primary metric for dividend distribution, is expected to show robust growth of 15% to 25%.

    “Net result from financial services ("NRFFS") ... Normalised ... 15 to 25”

  • The group achieved record annual performance in new business volumes, with normalised growth of 22% and net client cash flows more than doubling.

    “The increase in group new business volumes marks a record annual performance for the group.”

  • Discretionary capital increased by R4 billion, providing the group with significant balance-sheet flexibility to fund future strategic growth.

    “Discretionary capital increased by R4 billion following the partial sale of our stake in the SanlamAllianz joint venture, reflecting a disciplined decision to crystallise cash upfront while deliberately trading off a portion of future earnings to enhance balance-sheet flexibility and fund growth.”

  • Headline earnings pressure is largely attributed to temporary, unrealised investment variances and one-off corporate activity in the prior year base rather than operational weakness.

    “This further exacerbated negative investment variances in 2025, although these are unrealised losses which are expected to unwind over time as market liquidity normalises in due course.”

  • Reported earnings are under significant pressure, with HEPS expected to contract by 15% to 25% and EPS by 25% to 35%.

    “Headline earnings per share ("HEPS") [expected range] -25 to -15 [%] ... Earnings per Share ("EPS") [expected range] -35 to -25 [%]”

  • Value of New Business (VNB) has declined by 11%, driven by a margin-dilutive shift in product mix toward lower-margin market-linked products.

    “The decrease in VNB was largely driven by a shift in product mix in South Africa, as clients continued to favour market-linked/living annuities over life annuities.”

  • The group's Asset Liability Matching (ALM) strategy failed to insulate earnings during the IFRS 17 transition, resulting in the crystallisation of negative investment variances.

    “These investment variances were crystallised in the first half of 2025 as the group's ALM approach transitioned to one supporting the new IFRS 17 accounting standard.”

  • Higher finance costs from the Assupol transaction and increased project-related expenditure are creating a sustained drag on net operational earnings.

    “Net operational earnings were impacted by a strengthening rand and resultant foreign exchange losses, higher finance costs relating to the Assupol transaction, which were incurred for a full year rather than three months in 2024, as well as increased project related expenditure associated with corporate activity and modernising legacy systems.”
Category
Trading Statement
Published
Mar 5, 2026

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